I had to re-install the OS of my PC (SpyWare Log Jam), after that I tried to re-install the high speed Internet application from ATT/Yahoo and it could not finish because it didn't recognize the 2 Wire modem.

Other computers on my home network (wi-fi) are working fine an even my PC has access to Internet when I use direct Internet cable connection (through the same modem).

Trying to use setup "manually" gets me to a non-confirmation of the key access code (the recommended USB Flash drive SMRTKY sends me in a circular motion). I get "Depending on the wireless software running on this computer, The Wireless Network Setup Wizard might not work. refer to article 871122 in the Microsoft Knowledge Base on Microsoft.com." - which I obviously cannot get to without Internet access.

Thanks for any help.I had to re-install the OS of my PC (SpyWare Log Jam), after that I tried to re-install the high speed Internet application from ATT/Yahoo and it could not finish because it didn't recognize the 2 Wire modem.

Other computers on my home network (wi-fi) are working fine an even my PC has access to Internet when I use direct Internet cable connection (through the same modem).

Trying to use setup "manually" gets me to a non-confirmation of the key access code (the recommended USB Flash drive SMRTKY sends me in a circular motion). I get "Depending on the wireless software running on this computer, The Wireless Network Setup Wizard might not work. refer to article 871122 in the Microsoft Knowledge Base on Microsoft.com." - which I obviously cannot get to without Internet access.

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Sounds like you have high speed internet and also want a dialup connection as well. Maybe as a backup.
Anyway, your pc will need have a dialup modem installed in it.
If you already have one installed then you will also need a dialup ISP account. Some times an ISP will provide dialup in addition to broadband. Ask you ISP or call AOL.

Before you can use your linksys router again, you must configure first your AT&T modem under bridge mode. If the AT&T modem is already set to you may connect the devices (modem router and PC) must be switched OFF first.
after the devices had been connected,...
1) turn ON the AT&T modem first, wait for the DSL light to stay solid
2) turn ON linksys router,wait for the lights to stay solid
3) turn ON computer,wait for your desktop screen
4) try to access Internet Explorer

have you plugged everything in with the modem off and the router off?
have you tried unplugging the linksys for a sec then plug it back in?
also have you checked the pin connection on the plug on both the computer and the router?
what are the lights indicating?

Scenario 2 to 4:
Scenario 2) The modem does not have an Ethernet port. The modem is a dial-up modem for traditional dial-up service. To use the Router, you need a cable/DSL modem and high-speed Internet connection.Scenario 3) You cannot use the DSL service to connect manually to the Internet.After you have installed the Router, it will automatically connect to your Internet Service Provider (ISP), so you no longer need to connect manually. Scenario 4) The DSL telephone line does not fit into the Router’s Internet port.The Router does not replace your modem. You still need your DSL modem in order to use the Router. Connect the telephone line to the DSL modem, insert the setup CD into your computer, and then follow the on-screen instructions

I have att yahoo dsl which I installed about a year ago. The process required bridging the ADSL Modem (in my case a speedstream 4100) and accepting dynamic IP addresses and configuring PPPoE on the WAN side of my Linksys router. The ATT support person walked me through the entire process over the phone even though I was comfortable with making the Linksys configuration changes as I had to do the same in China without technical support. The modem configuration was no more difficult than the router configuration as it was performed from a web browser too. The biggest warning was that to reverse the modem change (if desired) required use of a reset button because the web interface was disabled as a result of the configuration change. My advice to you especially if you are willing to attach the Linksys router to the telco modem is to contact the ATT highspeed DSL support line and see if they will walk you through it like they walked me through it. Reviewing your Linksys User's Guide and understanding the configuration of that device would probably be appreciated by the ATT Support person as well as assuring you can access the Linksys router to configure it during the call.